No Growth, No Problem: P&G Still Has Lots to Love

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It’s been a less-than-ideal couple of quarters for consumer giant Procter & Gamble (NYSE:PG). A series of underwhelming earnings, agitated by ongoing headwinds in domestic and international markets alike, have sent the stock nowhere but sideways over the past six months. Shares have spent the time oscillating in a band between $73.61 and $85.82, at about $80 after the company reported fiscal third-quarter earnings that, once again, did little to excite the market.

Fiscal third-quarter net sales of $20.56 billion were effectively flat on the year and slightly below the mean analyst estimate of $20.68 billion, and for the nine months ended March 31, net sales of $64.04 billion were up 1 percent on the year. Organic volume growth, which is arguably a more important metric than net sales, increased 3 percent on the year, in line with established growth targets.

Organic volume increased the most (6 percent) in P&G’s Fabric Care and Home Care unit, followed by Health Care and Grooming (2 percent each) and Beauty (1 percent). Baby, Feminine, and Family Care (all one unit) showed no growth. Given unfavorable foreign exchange this quarter, the Fabric Care and Home Care unit was the only positive contributor to net sales.

“Fabric Care was up behind new innovation, developing market growth, higher pricing and initial innovation shipments,” P&G commented in the earnings release. “Home Care and Personal Power sales grew behind innovation and market expansion in developing regions, and Personal Power and Professional increased sales due to distribution expansion.”

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